South Korea stimulates blockchain startups with tax relaxation

South Korea extends its encouraging hand to startups by providing relaxation of taxes to boost upcoming technologies like blockchain. The primary motive of the government behind giving an extensive benefit to the blockchain based start-ups is for an impetus to the technological innovation. According to a report by BCFocus, the utility of blockchain technology is such that as a start-up innovation it is applied in Polish diamond trading.

The announcement has been made on Wednesday once the ministers belonging to eight different governmental agencies decided on the matter. As per the report of CoinDesk Korea, organisations dealing with evolving technologies must benefit from tax relaxation. This measure would assist in the proliferation of 157 “new-growth applied sciences” in eleven distinctive fields.

Besides the tax relaxation initiative, the ministers also made a proposal for decreasing the threshold level of eligibility for start-ups seeking tax deduction. Under the present tax norms, allocation of 5% of gross sale of the preceding year must be dedicated towards R&D department. Also, 10% of the total investment in the R&D has to be directed towards the progress of newer technologies like blockchain.

The minsters have been considerate towards the start-ups while amending the tax rules. The ministers agreed to the difficulties that a start-up might encounter on the first year of its operation by generating no sales. Hence, the ministers coined the new plan that mentioned 5% of the total sale allocated for R&D purpose has to be of current year.

The Relevant Dates and Timings

The possible amount of tax deduction has not yet been disclosed by the government. The government announced that on 26th July, 2018 the proposal would be elucidated. The new proposal is expected to be implemented in the initial phase of 2019. The discussion on the proposal of new tax norms for relaxation benefits was conducted on previous Friday. This is followed by the second meeting on the same subject matter on Wednesday.

A news report from Yonhap made a clear indication that the new benefit would be levied on all South Korean start-ups dealing with blockchain. These firms may belong to foreign nations or maybe domestic. Previously, ICT and Ministry of Science of South Korea declared to make $9 million investment by 2019. This large amount of investment would help to give a push to blockchain programs in six different areas of public services.